This week, the Financial Stability for the California Cannabis (FSCC) coalition was formed, which is good news for the industry. The group consists of several assembly members and industry stakeholders across the state, with a joint purpose: pass bill AB 776 and enable the cannabis industry to thrive. To do this, the coalition aims to raise awareness and offer solutions to severe credit issues that pose a threat to the stability of California’s cannabis industry. Some of the companies involved include big names like Kiva Sales & Service, Lowell Farms, Nabis, and Sunderstorm, among other key industry players.
Continue reading to learn more about the coalition and an update on committee actions for Bill AB 776.
Photo Via Unsplash by Richard T
The FSCC Coalition
The FSCC represents approximately 45% of the state’s industry by sales volume, including wholesalers, consumer brands, and producers. The coalition plans to provide high-level data and analysis on credit issues and propose potential solutions through a whitepaper. Meaning, they want to release an analysis in an informal document that will give readers insight into the issue. These insights will help them make a better, more informed decision.
Many industry leaders met informally during the fall of 2022 to brainstorm solutions. However, it wasn’t until February 2022, that Bill AB 776, aka the “Cannabis Credit Protection Act,” was formally created. Since the bill’s inception, it has gained support due to the data-driven recognition of the severe debt experienced across the supply chain.
Bill AB 776
This important bill, authored by District 9 Assembly member, Philip Y. Ting, establishes regulatory guidelines for credit sales in the cannabis industry. While the specific consequences of non-payment have yet to be added, the bill offers guidelines promoting payment accountability.
For instance, the bill states that it would require a licensee to pay for goods and services, sold or transferred by another licensee, with a total value of at least $5,000, no later than 15 days following the final date set forth in the invoice or invoices. At this time, no exceptions have been defined yet. If the sale fails to be paid off, the wronged party must notify the department. In turn, the department will then notify the other party of this report. After that, the department may issue a warning/citation or inflict a different disciplinary action against the licensee who fails to pay the outstanding invoice, in full, 30 days after this notification. Additionally, for parties who fail multiple times to comply with these provisions, another currently un-specified disciplinary action will commence.
According to Nabis, Phil Y. Ting’s reasoning for authoring the bill revolves around the restrictions at the federal level that have given California’s legal cannabis operators limited options for financing and capital.
“My legislation aims to bring much-needed financial stability to California’s industry, while also ensuring that operators receive payment for goods and services in a timely manner.”
Phil Y. Ting, Author of AB 766
AB 776 Progress Update
The most recent update on the bill took place on May 18 during a regular session. Ultimately, the committee postponed the hearing. If passed, the bill wouldn’t go into effect until January 1, 2024. To stay up to date on the timeline of committee actions, you can go to this link. If you are looking for more up-to-date cannabis news, check out the Respect My Region home page.
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